Darling says Labour 'won't flinch' from cuts

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The Government will not flinch from the "hard choices on public spending" needed to bring Britain's national deficit back down after the country emerges from recession, Chancellor Alistair Darling pledged today.

But he defended the role of active government in supporting society and insisted that he and Prime Minister Gordon Brown will be guided by "our core values of fairness and responsibility".

The Chancellor's comments, in a speech to an audience of businessmen in Cardiff, were seen as paving the way for public sector spending cuts expected to be outlined in the Pre-Budget Report this autumn.

Mr Darling stopped short of announcing what services are likely to be cut to rebalance the public finances.

But he made clear that even Labour sacred cows such as the NHS will be expected to make a contribution to efficiency savings, citing a drive to make better use of preventative care to avoid the development of long-term conditions which are expensive to treat.

In a keynote lecture to the Chambers of Commerce at Cardiff City Stadium, the Chancellor set out the Government's determination to "never risk the fiscal sustainability of our economy".

He said: "This will mean, as Gordon Brown and I have already made clear, hard choices on public spending.

"We won't flinch from these difficult decisions. But we will always be guided by our core values of fairness and responsibility."

The Government's "first priority" in seeking to bring spending under control would be efficiency savings and shifting resources to the front line, rather than reductions in services, he said.

And in a swipe at David Cameron's Conservatives, he added: "Some seem in a hurry to cut services. We are focussing on cutting costs."

Mr Brown's spokesman rejected suggestions that Mr Darling's comments indicated that he was more committed to reducing the deficit that the PM, who has previously sought to characterise the coming general election as a choice between "Labour investment versus Tory cuts".

The spokesman said: "The Prime Minister and Chancellor are completely aligned on public spending. They have both made it clear there are difficult choices to be made on public spending."

Mr Darling sought to establish a clear line between the Labour and Conservative approaches to reducing the deficit, telling his audience: "There are some who use today's global crisis to justify widespread cuts in public expenditure without spelling out their economic and social impact.

"For the economy to recover, targeted public investment is essential for the creation of the new jobs of the future.

"We are ready to make the tough choices necessary, while continuing to build a fair society and a strong sustainable economy. And for this, the role of Government is as important now as it was in the past."

And he warned that it was too early now to reduce the Government's fiscal stimulus package, as Conservatives have urged.

"Cutting support now, as some are demanding, would run the real risk of choking off the recovery even before it started and prolonging the global downturn," he said.

"But in the medium-term we need to live within our means. Not to do so would be equally irresponsible and damage our country's future."

On Saturday, G20 finance ministers meeting in London agreed economies should be supported by government spending until they have recovered.

But when recovery had been established, all countries should "rebuild their fiscal strength", Mr Darling said.

"The global economic background means that spending will be tighter everywhere - all the more reasons for ensuring that the front line comes first.

"Properly targeted public investment can, and must, make a difference.

"But this means making choices and setting priorities. It means more efficiency, continuing to reform, cutting costs, public and private sectors working together.

"Essential steps if we are to secure jobs and increase prosperity for the future."

Mr Darling told his audience, mainly owners of small and medium-sized businesses, that private endeavour and a functioning market are "key components" of a healthy economy but not enough on their own.

"People rightly talk of the invisible hand of the market but it goes alongside the enabling hand of government," he said.

But he added: "We need to constantly test the limits of what Government can do best - and where to step back - so that public investment and private endeavour can work hand-in-hand."